Money Changes Everything

The wireless world, once a financial darling, isn't seeing pennies, Euros or even reals from heaven anymore. However, today's monetary realities are teaching three important lessons: 1) Wireless is playing against the Big Boys now; 2) Money talks; and 3) Regardless of your status on Wireless' Penny Lane, bigger issues will drive change.

As the potential merger triad -- Bell Atlantic-AirTouch-Vodafone -- dissolved to a duet, my hopes for Bell Atlantic evaporated. Vodafone's conquest shouldn't have been a surprise. In the words of AirTouch President Arun Sarin, Vodafone won because it bid more and stamped a stronger footprint in the world market. So why was I caught off-guard? Once Vodafone entered the mix, I anticipated Bell Atlantic would counter. As another wannabe national, I expected Bell Atlantic to aggressively pursue AirTouch, blend in GTE and knit a contiguous national fabric to compete with AT&T Wireless and Sprint. I theorized it would be good for the company but better for the customer.

Last month I strolled down Madison Avenue, playing one of those New York wireless customers and visiting Sprint, Bell Atlantic and Omnipoint stores. Sprint's nationwide service plan is simple and easy. No nonsense with no if-and-when clauses. Bell Atlantic features a cornucopia of local plans, a USA plan, numerous prices per minute and exceptions for roaming. (Don't even get me started on the Omnipoint plans.) Sure, Bell Atlantic is the recognized provider in New York. Sure, it can offer service for subscribers who never leave their East Coast havens. But folks who travel even a little have to look at these two plans and wish Bell Atlantic had something a little broader and simpler. Unfortunately, I don't see that happening now with Vodafone entering the market.

Is the tequila bug going to spread from Brazil throughout the Americas? Is this a continuation of the Asian contagion? Not even the treasury secretary and his deputy know for sure. But here is what we do know: When the flu bug hit Asian soils, it hurt some U.S. wireless vendors back home. The vendors that had inked most of the international network contracts were hit the hardest. Earlier this year, Lucent said it had been slow to emerge in the international CDMA market ... and for once it was grateful. The result? Lucent's bottom line wasn't hit as hard as those of some of its competitors.

South America's largest country devalued its currency, the real, in a government-driven attempt to reduce interest rates, which have a stranglehold on industry. Oh, and meanwhile, the weakened real also will deepen the recession and encourage inflation. But hey, one disaster at a time.

So what effect will this have on wireless? For three years, Brazil's wireless market has been the apple of carriers' and vendors' eyes. Many of them have lined up with contracts in hand just for a shot at this lucrative market. A weakened real will make it harder for service providers to pay their debts to the once-accommodating vendors. According to The Wall Street Journal, Motorola, which took losses during the Asian flu bug, said costs associated with the Brazilian currency devaluation would cost the company $15 million. And this is just the beginning.

If the recession deepens as some predict, wireless subscribers may not be talking as much. The result? Lower usage provides reduced revenues for carriers who are already pinched to pay off debts.

Although Euro Disney has been a failure, the Euro dollar is faring better. So much so that some circles suggest that the world might migrate to a single currency in the new millenium. Imagine how easy it will be for tomorrow's worldwide wireless carrier to calculate currency charges for airtime.